uploads///US Investment Grade Bond Fund Flows

Investment-Grade Bond Funds Continue to Witness Outflows

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Nov. 20 2020, Updated 1:34 p.m. ET

Investor flows

Flows into investment-grade bond funds were negative for the week ended January 27, 2016. According to Lipper Fund Flow data, investment-grade bond funds saw net outflows of $1.2 billion during the week. This was compared to outflows amounting to $442.0 million in the week ended January 20.

Investment-grade bond funds have seen year-to-date (or YTD) net outflows of $3.5 billion as of January 27, 2016.

Investment-grade bond issuance was slow last week compared to the previous week. High-grade bond issuance fell by 19.7% to $23.1 billion.

In the week ended January 29, AT&T (T), Petróleos Mexicanos, Crown Castle International (CCI), US Bank NA Cincinnati, and Procter & Gamble (PG) were among the largest issuers of investment-grade bonds.

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Yield and spread analysis of corporate high-quality debt securities

Investment-grade bond yields usually follow cues from the Treasuries market. Last week, Treasury yields fell across the yield curve. Investment-grade corporate bond yields also fell in the same period.

The yields fell by six basis points and ended at 3.6% on January 29, according to the BofA Merrill Lynch US Corporate Master Effective Yield.

The return on the Wasatch-1st Source Income Fund (FMEQX) rose by 0.3%, while that of the American Century Diversified Bond Fund Class A (ADFAX) rose by 0.5% last week.

Unlike yields, the option-adjusted spread (or OAS) rose by six basis points to end at 2.0% on January 29. The OAS measures the average difference in yields between investment-grade bonds and Treasuries. Thus, a rise in this spread implied that the risk of high-grade bonds relative to Treasuries increased.

For more analysis of mutual funds, please visit Market Realist’s Mutual Funds page.

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